DiNapoli: MTA poorly managed $90M in cash, investments

Feb. 13, 2013

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ALBANY — The Metropolitan Transportation Authority held more than $90 million in funds and bank accounts that the state Comptroller’s Office said could have been used to meet its budget costs, an audit found.

The public transit organization, which serves New York City and its suburbs, “did a poor job managing its cash on hand, had excess bank accounts and no set targets for short-term investing of billions of dollars,” a news release from Comptroller Thomas DiNapoli’s office said.

The authority has endured fiscal peril in recent years, increasing fares and laying off employees to address budget deficits.

“The MTA is leaving money on the table, and in these tough times, every dollar counts,” DiNapoli said. “Our auditors identified several ways in which the MTA could vastly improve how it manages its cash and investments. The MTA must do better.”

The MTA rebutted some of DiNapoli’s claims.

“The MTA rigorously monitors its funds, balances and investments. We invest to achieve maximum returns while protecting the safety of our principal, and we maintain adequate balances at all times,” the authority said Wednesday, responding to the audit.

DiNapoli’s audit studied MTA’s management of its cash and investments from 2008 through March 31, 2011. As of March 31, 2010, the MTA maintained $1.8 billion in 126 investment funds, the audit found.

A sample of 10 funds totaling $881 million found $64 million that was not designated for any specific use. DiNapoli said this money should have been factored into the MTA’s budget.

The MTA said the excess funds in several accounts, such as the Triborough Bridge and Tunnel Authority reserve fund, “are essential to maintaining our credit rating, and are available in the event of emergencies such as Superstorm Sandy.”

DiNapoli also said the MTA lacked a written investment plan, which would include the authority’s expectations of what its investments will yield. Investments ranged from $4.7 billion in April 2008 to $2.4 billion in April 2009, the audit found.

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DiNapoli’s office said MTA officials explained that their current market objective is to attain the best return without losing any principal, though this policy is not formalized. Without documentation, it’s impossible to know whether the MTA met its yield expectations.

DiNapoli also took issue with the authority’s cash-flow management. MTA policy requires that a balance of more than $1,000 in certain accounts be forwarded to the Treasury Department for investment.

Of 101 accounts that auditors studied, 45 had balances exceeding $1,000 that had not been turned over to the treasury. Together, the balances totaled $27.6 million, the audit found.

The audit also found bank accounts with little or no activity “for which there was no apparent need,” DiNapoli’s office said.

Auditors found 19 MTA-NYC Transit bank accounts with fewer than 40 collective transactions over a one-month period and seven accounts that had no transactions at all.

The MTA said it will work with DiNapoli’s office to make changes, some of which the authority already has begun.